The OTCBB Obsolete Marketplace l Securities Lawyer 101 Blog

The OTC Bulletin Board (“OTCBB”) is an electronic quotation system that provides real-time quotes, last-sale prices, and volume information for some over-the-counter securities not listed on a national securities exchange such as NASDAQ. Brokers-dealers who subscribe to the OTCBB can use its platform to look up prices or enter quotes for securities quoted by the OTC.

Years ago, the OTCBB provided the only widely accepted venue for quotation of micro-cap companies that were SEC filers. Companies that did not meet the OTCBB’s requirements were delisted to what was then called the Pink Sheets. Now many market makers have abandoned the OTCBB entirely; the securities of issuers who used their services have been removed to OTCMarkets.

The OTCBB has become the Obsolete Marketplace for microcap stocks. Today 99.3% of all OTC securities are quoted by OTCMarkets.

Quotation & Trading on the OTCBB & OTCMarkets OTCQB

Interdealer quotation systems allow broker-dealers to post and disseminate their quotes for securities to the public markets. OTCMarkets Group’s OTC Link system and the OTC Bulletin Board are competing inter-dealer quotation systems for OTC securities. The OTCBB is operated by the Financial Industry Regulatory Authority (“FINRA”). While the OTCBB offers electronic quotation, it does not offer electronic trading of the securities it quotes; trades are still made by telephone. OTCMarkets Group’s OTC Link system offers electronic trading, which provides for more efficient execution of quote and trade information in real time.

Disclosure Requirements for the OTCBB & OTCMarkets OTCQB

Like the OTCMarkets OTCQB, the OTCBB requires that the companies they quote be SEC reporting issuers that file current reports with the Securities & Exchange Commission (“SEC”) or their banking or insurance regulators.

Costs of the OTCBB & OTCMarkets OTCQB

The costs of the OTCBB are as much as 50% higher than those of OTCMarkets. The cost to market makers has persuaded most to leave the OTCBB system. As a result, OTCMarkets has become the dominant quotation venue for microcap issuers.